Congress Approves Medicare Payment Patch, Provides 2.2 Percent Update

CMS Issues New Guidance to Medicare Contractors

Congress has passed and President Obama has signed a physician payment measure that will rescind a 21.3 percent reduction in the Medicare payment rate and provide a 2.2 percent increase in Medicare payments until Nov. 30.

The Senate passed the payment measure as part of a stand-alone bill on June 18, and the House followed suit on June 24, approving a measure that rescinds the reduction in the Medicare payment rate. That reduction technically went into effect on June 1, but CMS instructed its contractors to hold claims until June 18.

The payment patch will apply retroactively to claims for services provided on or after June 1. The legislation also provides a 2.2 percent update in the Medicare payment rate until Nov. 30, effectively blocking cuts called for by the sustainable growth rate, or SGR, formula for the next five months.

"Although today's vote provides a reprieve from ruinous pay cuts that threaten the financial viability of primary care physicians' practices and -- therefore -- their patients' access to care, it is not a satisfactory way to provide long-term stability to Medicare," said AAFP President Lori Heim, M.D., of Vass, N.C., in a prepared statement.

"The stability of federal payment is crucial to the success not just of Medicare but health reform as well," said Heim. "The health reform legislation calls on physicians to invest in changing their practices with health information technology, with new practice models that take time and money to implement, with new accountability standards and performance measurement reporting."

Physicians, she said, "can't invest in change if they can't count on payment for their services."

CMS released a statement on June 25, saying it has directed "Medicare claims administration contractors to discontinue processing claims at the negative update rates and to temporarily hold all claims for services rendered June 1, 2010, and later, until the new 2.2 percent update rates are tested and loaded into the Medicare contractors’ claims processing systems."

"Effective testing of the new 2.2 percent update will ensure that claims are correctly paid at the new rates," CMS said in the statement. "We expect to begin processing claims at the new rates no later than July 1, 2010. Claims for services rendered prior to June 1, 2010, will continue to be processed and paid as usual."

CMS also said, "Claims containing June 2010 dates of service which have been paid at the negative update rates will be reprocessed as soon as possible."

Under current law, Medicare payments to physicians and other providers paid under the Medicare physician fee schedule, or MPFS, are based on the lesser of the submitted charge on the claim or the MPFS amount, according to the CMS statement.

Claims containing June dates of service that were submitted with charges greater than or equal to the new 2.2 percent update rate will be automatically reprocessed, CMS said.

Affected physicians who submitted claims containing June dates of service with charges less than the 2.2 percent update amount will need to contact their local Medicare contractor to request an adjustment, according to CMS. Submitted charges on claims cannot be altered without a request from the physician. Physicians should not resubmit claims already submitted to their Medicare contractor, CMS said.